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Lifeline for Buy Now, Pay Later Service Providers

September 22, 2022

Fintech innovation resolves issues for popular credit companies

This article originated from the Xero blog. The XU Hub is an independent news and media platform - for Xero users, by Xero users. Any content, imagery and associated links below are directly from Xero and not produced by the XU Hub.
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Customers love buy-now-pay-later (BNPL) services.

38% of 1,746 Australians surveyed by RFI Global for the Australian Finance Industry Association reported using BNPL services in the last financial year, yet the sector lost over $1 billion in 2021. Why?

High processing values carry fraud and bad debt risks, especially in the unregulated credit environment that the BNPL industry operates in. As global economic headwinds swirl, BNPL providers are now looking to bolster their cash flows and reduce arrears and bad debts and in-turn cost to operate.

One Australian payments innovator has the answer. Tom Rundle, Chief Product Officer of Azupay explains, “We’ve looked at the most common problems facing billers and their customers and found a way to solve them”.

Azupay's real-time account reconciliation technology guarantees BNPL providers no more direct debit request delays or clawbacks. It minimises financial fraud risk and  helps to forecast costs. But best of all, there will be fewer arrears and write-offs. The biller can achieve many business efficiencies.

Tom explains, “We’ve combined our existing reconciliation offerings with the new PayTo real-time payment service; we call it azupayTo. This new system reduces the costs and cashflow impacts of failed payments.

“azupayTO lessens the pitfalls of current payment systems used by BNPL providers. We help businesses avoid late, incorrect, and cancelled payments. There will be reduced credit card fraud, defaults, declines, chargebacks and dishonours. Lack of reliable cash flow can be a thing of the past" Tom says.

How does it work?

azupayTO is like direct debit, only more efficient, transparent, and safe. It empowers individual and business customers to authorise real-time payments via their banking app. Unlike direct debit, azupayTO works instantly, 24x7, 365 days a year, even on holidays.

azupayTO increases billers' and customers' control and transparency. Billers are notified when an azuppayTo agreement is suspended, amended, or terminated. When a payment is initiated, the available funds are checked to ensure it can be processed without rejection or human intervention.

The azupayTO payment platform couldn’t have come at a better time. The Reserve Bank found that 1 in 5 BNPL customers missed payments in 2021. azupayTO doesn’t charge dishonour fees. Billers can confirm a transaction will be processed eliminating missed payment fees and costly customer follow-up and transaction re-runs.

Next Level Security

azupayTO also provides secure, central storage of customer payment agreements.

“Our system works with the latest New Payment Platform (NPP) systems in Australia’s banking industry,” Tom says, “Advanced protections are intrinsic to the design of the system, keeping safety simple for users."

All azupayTO mandates are stored safely on the New Payments Platform (NPP) and is backed by the Reserve Bank of Australia. Customers can access their agreements through their banking apps, while billers can use azupayTO APIs and dashboard to request payment and monitor agreements.

What’s on the Dashboard?

  • A centralised view of payment arrangements
  • Full administration and control over each agreement
  • Information and statistics associated with payments

"azupayTO simplifies to direct debit process for billers, especially BNPL providers," says Tom. "All transactions are pre-validated, and our application infrastructure, along with bank-grade security and scalability, eliminates risk and uncertainty with real-time account confirmation, fund verification, and automated notifications."

The benefits to corporations are substantial:

  • Simplified payment planning and collection
  • eCommerce and POS purchases supported
  • Banks directly monitor all transactions for fraud in real time

Getting Started is Easy

The Azupay team works with businesses to find the perfect payment platform solution to alleviate load on internal resources by automating manual processes. If a company already accepts direct debit payments, existing agreements can automatically transition to PayTo. A simple migration notice is all Azupay needs to transfer current direct debit requests to PayTo without customer participation. Each direct debit authorisation is converted into a PayTo Payment Agreement in each customer's mobile banking app or online bank statement.

Tom says, "We provide batch connectivity for older ERP systems and high-volume payment needs.

“Our APIs make payment integration easy. Pre-built PayTo API calls enable a feature-rich, fully integrated solution. Azupay's PayTo APIs allow companies to start accepting PayTo payments in days, not weeks."

Great for Customers Too

It’s not only billers who benefit. PayTo gives BNPL customers more visibility and control over their accounts in their internet or mobile banking app. No account sign-up or app downloads are required, and no personal information is collected, all that is needed is an Australian bnk account.

Customers can view and manage…

  • Terms of their payment arrangements
  • Start and end dates
  • Payment frequency and amounts

If a consumer authorises a PayTo agreement but lacks funds, the payment won’t be made. The system notifies the biller and customer of the failed payment. The notice can direct the consumer to immediately resolve the payment issue before any late payment and payment dishonour fees are incurred. The low flat azupayTO transaction fee means billers don’t have to pass on a surcharge to customers, boosting trust, loyalty, and retention.

The Next Evolution in Payments

This kind of payment system disruption has been well overdue in Australia. Those acquainted with Azupay may question how this new service differs from azupayID, which is a 'push' payment platform. azupayTO allows a merchant to pull the payment from a customer's nominated account.

“azupayTO can assist BNPL firms to reduce costs and increasing cash flow which in turn provides better and cheaper access to funds."

Azupay also solves for paying BNPL merchants instantly. The azupayOUT disbursements engine allows businesses to instantly make outward payments and enables BNPL clients to wow their merchants. For example, a merchant might pay an upgrade fee to their BNPL partner to receive real-time funding for a transaction instead of waiting for an overnight transfer.

"As an independent fintech company, we are excited to provide services that banks do not. Our technology interfaces instantly with your designated bank accounts, and money doesn’t need to travel through our accounts; instead, payment requests are processed from bank account to bank account in real time, instantly 24/7/365."

Want to know more? Download the PayTo white paper here or get in touch with the azupayTO team at

Why leave it there?

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